BORN ON THIRD BASE: Sources of Wealth of the 1996 Forbes 400

BORN ON THIRD BASE:
The Sources of Wealth of the 1996 Forbes 400

Executive Summary

INTRODUCTION

Each year, Forbes Magazine releases its round-up of the four hundred wealthiest individuals and families in the United States. The list usually captures people's interest and leads to accolades for the prowess of U.S. entrepreneurs. Forbes usually indicates which of the four-hundred are "bootstrappers" --individuals who started with nothing yet rose to the heights of our wealthiest individuals.

But Forbes' analysis leaves many questions unanswered. Researchers at United for a Fair Economy were curious about where these individuals started in life. How many grew up in families with no substantial savings or wealth? How many inherited wealth or companies --and grew them into greater fortunes? And how many simply inherited their way onto the Forbes 400?

Baseball and making money are truly America's favorite pastimes --and each year the Forbes list coincides with the post-season of America's great game. But how many of our wealthiest citizens actually started life in the batter's box and faced the pitcher? And how many started life on first, second or third base? How many were born crossing home plate and inherited their way directly onto the Forbes 400 list?

"Born on Third Base" takes another look at Forbes' celebrated list of "bootstrappers." Through extensive research, we examined the starting place of the four hundred individuals and one hundred families that Forbes highlights.

SUMMARY OF RESULTS

We examined both 1995 and recently released information about the 1996 Forbes list. The average of 1995 and 1996 results indicate that:

• 30.1% Started in the Batters Box -- includes individuals and families whose parents did not have great wealth or own a business with more than a few employees.
• 13.9% Born on First Base -- includes individuals whose biographies showed signs of a wealthy or upper class background, but did not apparently have assets of more than $1 million.
• 5.75% Born on Second Base -- members inherited a small company or wealth worth more than $1 million, but less than $50 million.
• 6.85% Born on Third Base -- includes people who inherited substantial wealth, in excess of $50 million, but not enough to qualify for membership in the Forbes 400.
• 43.35% Born on Home Plate -- includes those who inherited sufficient wealth to rank among Forbes 400.

Between 1995 and 1996, the net worth of the Forbes 400 increased from just over $500 billion to just under $593 billion -- a gain in net worth of 18 percent. There was a 38% increase in the number of billionaires.

EXAMPLES

Batters Box H. Ross Perot was son of a horse trader and born into a comfortable but by no means affluent family.
Wayne Huizenga got his start by buying a garbage truck and starting a waste-hauling company. He took over the 19-store Blockbuster video-rental chain and built it into an industry leader.

First Base Bill Gates' parents were comfortable professionals and he went to Harvard University, but quit for better prospects. He got a head start in life, but the success of his venture did not depend on substantial family money or assets.
Forest Mars, Sr. took over a small European candy business from his parents and invented the Milky Way bar.

Second Base Donald Tyson inherited a small company, Tyson Foods, from his father in 1967 but then built it up into a substantial business.
Poultry magnate Frank Perdue inherited his father's egg farm and hatched millions in chickens.

Third Base Kenneth Feld inherited Ringling Brothers Circus in 1982 when it was worth tens of millions but took it to the big top.
Edward Crosby Johnson III inherited Fidelity Investments from his father but was involved in growing it into the "pace car" of the mutual fund industry.

Home Plate J. Paul Getty, Jr. inherited the oil fortune from his father.
David Rockefeller is the great grandson of Standard Oil founder John D. Rockefeller.

METHODOLOGY AND RESEARCHERS

Members of the Forbes 400 were placed into five categories based on information from: Forbes Magazine (October 16, 1995); Forbes Magazine (October 14, 1996); Contemporary American Business Leaders: A Biographical Dictionary, Business Week, The Who's Who of America, Entrepreneurs, by Joseph Fucini, Entrepreneurial Megabucks by A. David Silver (1986).

Because accurate information was not available on the precise value of assets previously held by the family of a current Forbes 400 member, the study team took a conservative approach to categorizing the Forbes 400, assigning each member to the lowest category that the data would support. It is likely, then, that the analysis understates the number of Forbes 400 members who belong in the "Home Plate" and "Third Base" categories.

This study was researched by Paul Elwood, independent researcher, Cambridge, MA.; S.M. Miller, Commonwealth Institute, Cambridge, MA. and Marc Bayard, Tara Watson, Charles Collins and Chris Hartman from United for a Fair Economy in Boston, MA.

For further information or a hard copy of the entire study, contact: United for a Fair Economy. E-mail infofaireconomy.org">infofaireconomy.org